Xbox, PlayStation and Nintendo face uncertain future, with online games like Fortnite earning billions of dollars

The measuring stick for success between the big three gaming companies Sony, Microsoft and Nintendo has long been how many consoles they’ve sold. But all three have had banner quarters in which they largely highlighted software rather than hardware sales, underscoring a shifting relationship between the games and the boxes on which we play them.

This change reflects a broader conversation in the industry about the future or even death of the console as we know it – away from the powerful box in our living room towards a more mobile world where even technologically demanding games can be played on any screen that has an internet connection.

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Recent games such as Epic’s Fortnite, which is played online and has taken the world by storm, show that a console isn’t necessary for even a fast-paced multiplayer game. Nintendo is launching its first subscription game service in late September.

The chief executive of game publisher Ubisoft said in an interview earlier this year that he believed the next generation of consoles would be our last. “There will be one more console generation and after that we will be streaming, all of us,” Yves Guillemot told Variety.

“Being able to play content anywhere would be huge,” says Doug Creutz, media analyst at Rogers and Cowan. With the technology to beam console-quality games to any device, he says, consumers wouldn’t have to spend the money for a US$600 or US$800 box, and developers wouldn’t be constrained by the processors and chips that fit in a console.

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Ubisoft’s Chris Early, vice-president of partnerships and revenue, says that streaming’s appeal for major publishers like his is that it makes it easier for even more people to play games. “Gaming has become an increasingly a part of mainstream life for everybody,” he says. “When we think about streaming and cloud computing is key advantages is more and more people can play.”

Microsoft last month reported that gaming revenue hit US$10 billion for the first time this past quarter, bolstered by subscription and software sales. Nintendo reported its profits were up, thanks to interest in games for its portable Switch console. Sony, the world leader for consoles, also reported that PlayStation revenue drove the company’s overall revenue to US$17.9 billion, and projected software sales will help the unit rise 15 per cent next quarter.

Actual console hardware is also starting to shift toward something more lightweight. Nintendo’s popular Switch proves that our traditional idea of the console doesn’t have to be tethered to the living room. It’s possible we’ll see more focus on powerful portables. Sony’s new PlayStation head Tsuyoshi

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“John” Kodera told reporters in May that his company, too, might consider something more mobile. There are also rumours of a new Microsoft console that can still sit in the living room and pull some of the processing power, but doesn’t have the bulk or full limitations of a box, according to tech news site Thurrott.com.

But for real revolution – and the true death of the console – many more things have to change than just the technology of what’s sitting in your living room. While internet networks have come a long way, much of the country is still limited by the speed of their networks, says games analyst Mat Piscatella of NPD Group. While he expects a new generation of consoles in 2020 to have a greater focus on streaming, the console isn’t going anywhere soon.

On the business side, it’s also not clear how publishers will make money if console makers move to an all-streaming model, Cruetz says. Playing games is different than watching Netflix, he says, in that gamers tend to stick to playing one game for months or even years, rather than flit through a large selection. That makes it hard for game publishers to guarantee that a broad catalogue of games will mean playtime for their titles.

Phil Spencer, executive vice-president of gaming at Microsoft, compares the evolution of moving games to streaming to the change we’ve seen in streaming video. Microsoft’s goal, he says, is to move gaming to a medium where you can play what you want where you want. But, he points out, even though streaming video claims mind share and market share, DVD sales still pull in billions of dollars per year. Big shifts like this, he says, don’t happen as quickly as we all think they do.

“It takes time,” says Spencer.

The Washington Post